Adding Tournament to Tournament: Combining Between-Team and Within-Team Incentives

35 Pages Posted: 5 May 2018

See all articles by Michael Majerczyk

Michael Majerczyk

Georgia State University

Roman M. Sheremeta

Case Western Reserve University

Yu Tian

University of Central Florida - Kenneth G. Dixon School of Accounting

Date Written: April 18, 2018

Abstract

We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding is likely to occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams.

Keywords: Individual Incentive, Team Incentive, Tournament, Free-Riding, Collusion

JEL Classification: C70, D72, H41

Suggested Citation

Majerczyk, Michael and Sheremeta, Roman M. and Tian, Yu, Adding Tournament to Tournament: Combining Between-Team and Within-Team Incentives (April 18, 2018). Available at SSRN: https://ssrn.com/abstract=3165082 or http://dx.doi.org/10.2139/ssrn.3165082

Michael Majerczyk

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Roman M. Sheremeta (Contact Author)

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

Yu Tian

University of Central Florida - Kenneth G. Dixon School of Accounting ( email )

University of Central Florida
P.O. Box 161400
Orlando, FL 32816-1400
United States

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